Nicolas Maduro’s “Petro” Rated as One of the Worst Scams in Cryptocurrency

As new investors increase their knowledge about the crypto market, they start to check some of the most reputed ranking agencies as well as the indicators provided by their exchange services of choice. Not only it’s a way to get some perspective on for our investment strategies, but it can also let us understand what the new currencies, tokens or altcoins that could be poised to disrupt the market are.

It’s not uncommon to get some insight from the Weiss Agency, ICOindex, ICObench, Bitfinex or the daily charts offered by services such as Coinbase, Coinsquare, Kraken or ShapeShift. As you probably have heard in the last few months, Venezuela is looking to enter the game by creating their own cryptocurrency to navigate one of the worst economic crises ever faced by the Caribbean country.

Unfortunately, the Venezuelan government seems to have received some of the worst ill-advised knowledge on how cryptocurrencies work. The project is called the “Petro” and trying to explain just how the current administration of the country plans to make it work more contrived and complicated than trying to solve the genealogical family three of the Tolkien characters in the Lord of the Ring Saga.

When the announcement of Petro was made the whole idea behind it contradicted everything a crypto asset should stand for: the Venezuelan government made it very clear on their whitepaper that the oil reserves of the nation backed each Petro token. But the country’s oil industry is currently working at less than two-thirds of its capacity.

Having crypto assets backed by natural resources that cannot be exploited is the same as saying that these digital assets are supported by air. Plus Petros are pre-mined and whoever pays for them will not receive tokens on a digital wallet, they’ll receive a certificate stating ownership, and that’s it.

A Disastrous Launch

When the Petro was launched, Venezuelan officers made a full-blown campaign about having achieved a milestone of $5,000 million raised from third parties, yet they refused to make public the information about who were these investors.

The Petro was supposed to work on the ERC-20 protocols provided by Ethereum. Three days before the launch the platform was suddenly translated to the NEM Blockchain and to this day, not even a single Petro has been issued by the exchange service. It doesn’t help at all that the Venezuelan government is setting the price of each Petro instead of letting the market handle it.

International Sanctions

When you think about the biggest markets of the world America and Europe immediately comes to mind. For Venezuela, they are the most dependable options to do business with since the geography favors them. Instead, they have found a barrage of blockage by the EE.UU administration and the European Union.

America has issued some international sanctions that forbid any American or American-dependent economies from doing business using Petros. The EU has emphasized to each one of their members to follow suit and block the asset on all the countries of the union. The only ones who seem to offer little superficial backup are the Russians and the Chinese.

Economic Strategies that Don’t Make Sense

Even in the face of adversity, Nicolas Maduro moves forward with the plan of using the Petro as a tool for financial leverage. The mandatary recently anchored a new currency called the Bolivar Soberano to the cost of a Petro and raised the minimum wage at 1800 BsS (180,000,000 Bs of the old currency)

The mathematics behind this strategy are still being figured out by the country’s economists but the first signs of this poor-conceived strategy where made evident after just two weeks: nearly 3,000 business closed down, unable to pay these wages. A sad state of affairs for a country that has everything to succeed.

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